Malcolm Turnbull told to quit the cigs after stakes in big tobacco revealed

He has called tobacco a "dangerous drug" and the single most preventable cause of bad health and death in Australia.

So why does Prime Minister Malcolm Turnbull still have a financial stake in two of the world's biggest tobacco companies, 18 months after he promised to snuff out out his sharemarket exposure to cigarettes?

According to his recently released pecuniary interests register, Mr Turnbull has shares in three funds that invest in tobacco.

One is a European fund that invests in British American Tobacco and the others are Japanese funds with shares in Japan Tobacco – the third and fourth-largest tobacco companies by market share in the world.

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Illustration: Matt Golding

BAT's biggest brands include Dunhill and Lucky Strike, while Japan Tobacco is responsible for Benson & Hedges and Camel.

Ethical investors and anti-tobacco campaigners are urging Mr Turnbull to dump the funds and find new investments that avoid cigarettes.

In April last year Mr Turnbull, then still communications minister, divested his stake in a US investment fund after it emerged it had a stake in Philip Morris. He instructed his investment adviser to ensure that he and wife Lucy Turnbull had no more tobacco exposure through their managed funds.

His current investments with iShares MSCI Japan, Deutsche X-trackers MSCI Japan Hedged Equity and Vanguard FTSE Europe are somewhat different because all three are exchange traded funds. ETFs passively track and invest in a whole index.

But Stuart Palmer, head of ethics research at Australian Ethical Investment, said that's no excuse and Turnbull should quit the cigs.

"We think everyone should be asking the question, are they investing in line with their values?" Dr Palmer said.

Dr Palmer said the Prime Minister should be leading by example and investing instead in ethical ETFs, which screen out controversial companies such as tobacco producers and weapons manufacturers.

"There is quite a lot of research now in Australia and globally that responsibly managed funds that have ethical screens do not underperform their mainstream peers," he said.

Asked for comment a spokesperson for Mr Turnbull said: "The PM does not choose individual equity investments and leaves investments up to an investment manager."

Ethical investing via ETFs is booming worldwide and is particularly popular with younger investors.

And it's not just boutique or niche firms offering ethical ETFs. Even global giants like UBS offer structured ETFs across the world – including in Australia, Europe and Japan – that exclude tobacco companies.

Anti-tobacco campaigner Bronwyn King said it was important for all Australians to understand they might unwittingly have investments in tobacco. "We all need to take a look at our finances and explicitly request they are tobacco-free to be truly comfortable with our investment," she said.

Dr King applauded Mr Turnbull for his earlier decision to dump some tobacco stocks.

Dr King is a radiation oncologist and founder of Tobacco Free Portfolios, which has played a pivotal role in convincing 35 Australian superannuation funds to divest their tobacco stock.

A number of other institutions – from universities to the government's own Future Fund – have also dumped their tobacco stocks in recent years.

Shadow Assistant Treasurer Andrew Leigh said Mr Turnbull had made some questionable investments – like donating his own cash to the Liberal Party.

"He can choose where he invests all his money and he knows these funds invest in tobacco – so it's up to Mr Turnbull to justify how he thinks this is acceptable," Dr Leigh said.

The Liberal Party decided in 2013 to stop accepting donations from tobacco companies, almost a decade after Labor made the same decision. However the Liberals' Coalition partners the Nationals still accept them.

Along with Philip Morris, British American Tobacco and Japan Tobacco have been at the forefront of the fight against plain packaging laws around the world. Australia was the first country in the world to introduce the measure.

Most politicians invest through a blind trust because it gives control of their investments to a third party, but also hides details of their holdings from the public.

Mr Turnbull does not use a blind trust, giving him greater control over his investments but also opening him up to more public scrutiny.